(Updated: 01/05/2000)

N.B. Above Chart is abstracted from Metastock Program

Last week we said that, "From Elliott wave point of view, the coming week will be very critical for both markets. If the bear is still controlling then both Dow Jones and Nasdaq indices must move down vigorously next week (preferably in an impulsive way) to satisfy the wave expectation. On the other hand, if both indices can stand a tough test next week  then the big plunged two weeks ago may be just a correction for the multi-years bull market. Hence we believe next week will be very crucial for the market, and most likely the trend will be determined by Thursday in line with the released of USA Employment Cost Index and the 1st Qtr GDP." Indeed, last Thursday was very crucial to US market. Both S&P and Nasdaq Futures opened with a limit down, but were managed to make a come back and closed in positive territory. These had shown to us that the underlying strength in US market remain very strong and should not be under estimated. The strong performance in US market had also brought in the strength to our STI index, with STI moved up on the last four days and a gained of 117 points for the week. As for Sesdaq, it had followed the big board, surged past the resistance at 116 and closed at 119. To sum up, last week was quite a good week for our local bourses and it was the first time in many weeks that we had seen a continue positive closed for a consecutive four days. The question now is, can the up-move continue? Are we back to the up trend bull market now? Is the correction in US market over?

The performance on Nasdaq and S&P last Thursday had really impressed us. With the Employment Cost Index painted an inflationary picture, the market can still erased the worry and make a U turn to move up. This had suggested to us that we may have seen the short term bottom. However, that does not mean that we are completely out of the wood. To make the bull in control, Nasdaq must move up to above 4,000 as soon as possible, hopefully within this week or next. Otherwise, the US market will continue hovering in the no man land, with an equal chance of moving in either direction. Perhaps the coming released of April Employment report on Friday will give us a better clue on the near term market direction. As for STI, the fact that it had broken above key resistance at 2120, suggested to us that it may continue to move up. A break above 2200 will indicate to us that wave B is still unfolding and that our idea target of 2300-2360 is quite possible. As for Sesdaq, a break above 120 will bring the index into a critical resistance at 125-127, which should hold the current rebound before coming down again.

The following are resistance and support to watch for Dow Jones, Hang Seng and Nikkei next week.

Any break-out on these levels, will certainly affect our STI movement.

We have put 2583 as the top of wave 5 of wave (5), even thought theoretically we should wait until STI close below 1970. This premature labeling may lead us into a wrong picture for the long term, if STI eventually stay above 1970 and do not break below it. But nevertheless, the early we make our stand, the easier it is for our investment decision. At current stage, it looks as if that wave B may be still unfolding. A break above 2200 will confirm our view that STI is still in wave B and that the idea target for it will be at 2300-2360.

Events To Watch For The Coming Weeks/Month .

1. Friday's released of US April employment report.
2. The possible tension developed between China and Taiwan.
3. The political development in Indonesia.
4. The movement of US stock market and T-bond.
5. The movement of Dollar vs Yen.
6. The stability of Regional and Singapore currencies
7. Regional stock markets movement.
8. Singapore 3 months Inter-bank rate.